CAF-2 · Chapter 8 · Question 13 of 15
A company acquired a software license (an intangible) on 1st April 2026 (falling in Tax Year 2026) for Rs. 365,000. The useful life of the software is 5 years. What is the amortization deduction allowed for Tax Year 2026? (Assume 365 days in the year and 91 days from 1 April to 30 June).
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) B) Rs. 18,200
Explanation
The formula for part-year amortization is A x (B/C). A (Full year amortization) = 365,000 / 5 = 73,000. B (Days used) = 91 days. C = 365. Therefore, 73,000 x (91/365) = Rs. 18,200.
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